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IoT and retail: how your shopping habbits will be changed
The recent pandemic left noticeable marks on the retail business. Many retailers went online and some even closed down their physical locations. As the pandemic ended the ones that still operated in the physical world were left with an important question: how can we compete with a growing online presence, invite new clients and deliver more value to already existing clients?
As we could witness the speed how the pandemic pushed digital transformation often we could hear a joke:
Who is driving digital transformation in your company? Is it your CTO? CEO? CFO?
No! COVID!
As this harsh manager was leaving, it left us with a different world, different IT systems, and new problems to solve. One of them is the difficult question of how to improve the retail store experience and how to make this experience worthwhile for the enterprise. As a rule of thumb – for every problem, there is a solution and most often it has been around for years, waiting for the big moment. And that moment is here – we would like to welcome the Internet of Things (IoT) on the retail stage. IoT has been developed for more than 20 years, but only recently (especially with the growth of 5G) has it gained greater importance on many digital roadmaps.
Applications of IoT in retail
Smart devices enable options from automatization to monitoring and issue detection. Over the last few years, IoT has grown from focusing on a macro scale, inventory tracking, and fleet tracking to a micro-scale – predicting data, actions, and outcomes on individual device levels.
Inventory management
“Stocking the shelves” has always been a huge challenge. Each decision point requires some calculations and considerations (e.g., how often and how much you deliver versus delivery and storage costs). This requires constant coordination (while it’s hard if you own the vertical from warehouse to store the difficulty level is extreme if you are “just a small part of the system” and have to rely on external services (e.g., delivery, logistics, accounting) which on many occasions are shared services. To add complexity – some goods require specific conditions to be met in order to be sold.
Products like meat or milk need to be stored and transported at specific temperatures. Some goods require specific lighting, moisture, or ventilation. IoT sensors can detect changes and notify in real-time so appropriate actions can be done. If a refrigerator stops working late Friday evening it would be better to pay some overtime and store products in different refrigerators instead of discovering it on Monday and losing sales, and stock and paying for the cleaning/utilization.
Weight sensors, cameras, or other measurement devices can be implemented on shelves to monitor how full or empty they are and notify the staff (or automatic robots) that shelves need to be refilled. This helps to keep the inventory visible and can even prevent theft. Adding data analytics stores can determine which items will be going bad earlier so they can be stocked first. Prices can be also adjusted according to a specific algorithm keeping in mind the spoilage date, popularity, default price, and other factors. Push notifications can be sent to subscribers’ smartphones:: “Hey, we have 10 things you wanted to be left for half price at XXX store. Don’t be late”. And then use further marketing: “Only 5 items left. Hurry up”
A growing area of IoT over the last years that many have noticed – is the big retail chains (and not so big) offering delivery services or package self-pick-up services. This omnichannel approach requires a very precise approach as the goods are picked up for pick-up or delivery from individual stores: stock information in every location must be up-to-date. Changes in stock come from online, in-store, and cross-store orders (plus resolving issues like “1 item is in the database, but someone has taken it in the store and hasn’t bought it”. And of course, this solution is connected with global systems for inventory management needs (tracking, stock, delivery planning, etc.). IoT increases visibility and accessibility for both retailers and clients.
Analytics
Apart from stock, delivery, and route analysis using IoT sensor data, another important area is the analysis of store visitors. With IoT sensors, you can monitor standard movement, see where it differs from your planned route, understand and control capacity, optimize store layouts, and waiting times, and more. IoT gives the possibility to gather large data sets which allows us to model possible solutions and analyze real data (it would be very hard to get your employees to follow step-by-step customers in-store and write down each step and delay). IoT sensors (camera, light detector, ranging strips, etc.) can detect the number of people in the line. Imagine how cool it would be if there was an automatic bell that calls another cashier to reduce waiting times (instead of the usual situation – peak hour and 1 cashier working, middle of the day – everybody is sitting, doing nothing).
Customer experiences
As discussed in a previous post about the Internet of experiences, smartphones can be used to engage with customers. Many stores already offer loyalty cards that are used with purchases (to collect information about buying habits and offer some discounts in return). The same cards can be used in terminals before entering the store where they produce individual offers and discounts based on different variables. This can help to improve customer experience. Also as customers are starting to build a habit of checking the offers before every entry, it allows stores to guide people to specific areas or to push specific items to remove them quickly from the stock (Hey, if all the offers are generated for me, this one weird thing must be something suitable for me). Also, phones can be used to lure people in Calculate on which dates your customer makes the biggest purchases, calculate when they spend most time shopping (e.g., from looking at individual offers to buying stuff), and decide what is the customer most interested in. And then just wait for the perfect opportunity when an unsuspecting customer is walking by. One push message and you may have a happy customer.
Asset tracking
IoT offers great opportunities to track the location and status of mobile equipment and other assets. From real-time location to real-time status. Such a solution provides statistics about use, maintenance, and issues that allow for optimizing asset usage. Solutions can be both to optimize costs – specific parts replacement based on statistics before they cause downtime and additional costs (for example: In some European countries it’s forbidden for a train to continue its journey if one of the doors isn’t closed. This would cause either to wait for the service crew or to send another train. Both options result in delays, unhappy customers and possible monetary loss) as well as provide dynamic service fees (if clients are using your heavy-duty equipment without rest periods (which causes expensive repairs in long term) you increase the rent). More common areas are fleet management systems, inventory control, and security.
Areas like manufacturing can greatly benefit from IoT. Connecting them in a common grid can allow you to save costs, improve productivity and align other aspects of your end-to-end process. For example: if your sawmill is using chipper lines, you can measure the moisture, and monitor sawdust, and small shavings to predict small maintenance cleaning before the machine is all clogged up and requires hours of downtime. In the same way, you can measure the metal content in the lumber and shoot down the processing of the batch if the levels get too high).
PoS terminals
Already today this seems to be the most obvious utilization of IoT – use your PoS terminals everywhere you go and have a mobile network. Some banks have innovated even further – your phone can be used as a bank card with a built-in NFS chip and the card needs to be loaded with the amount you want to pay to avoid any bad actors. Some companies already offer PoS functionality on smartphones to reduce the need for expensive terminals – just 2 NFS-enabled smartphones exchanging funds. This gives major freedom to create new services or improve existing ones (like Bolt Food or Wolt) allowing clients to pay when receiving and without a need to equip your delivery people with individual PoS terminals.
At the end of the day, IoT will bring significant improvement to the retail sector and has been for many years already. What is missing in all these examples? A smart system that would allow you to connect all of these devices and integrate with BI systems and integrate your enterprise solution. That would allow you to use CRM directly with inputs from IoT devices and send the outcome to the logistics system, warehouse system, and billing system. Design that is flexible and can be easily adjusted. Nowadays every manufacturer provides its framework, system, or API. The problem is – once you start using many manufacturers, many applications, and options, you are not able to maintain the low cost to continue the same service as before. Different agreements, developments, point-to-point integrations, etc. These costs will creep up and cause great delays. Let us help!